The Law on Obligations

I. PRELIMINARY CONSIDERATIONS

A. OBLIGATION, definition

B. ESSENTIAL REQUISITES OF AN OBLIGATION [ P A L O ]

1. Passive Subject (Debtor/Obligor) – has the duty
2. Active Subject (Creditor/Obligee) – has the right
3. Legal Tie (Juridical Tie/Efficient Cause/Vinculum Juris) – ties the passive subject
to the active subject in the performance of the obligation or, simply, the source of the
obligation
4. Object (Prestation/Subject Matter) – which may be an act of giving, doing, or not
doing.

C. SOURCES OF OBLIGATION [ L C Q D Q ]
1. Law – source of most obligations
2. Contract
3. Quasi Contract
a. Difference from Contract
b. Purpose
c. Principal Kinds Consent is present in
i. Negotiorum Gestio Contract not in quasi-
ii. Solutio Indebiti contract
iii. Obligation to return lost property
4. Delict (Felony/Crime/Acts or Omission punishable by law)
5. Quasi Delict (Torts/Civil Negligence/Culpa Aquiliana)
a. Difference from Delict
Quasi-delict is a product of
b. Requisites
negligence and hence is
i. Existence of fault or negligence
unintentional, whereas
ii. Independent from contract
delict is intentional.
iii. Injury cause to the person or right of another

QUASI- QUASI-
LAW CONTRACT DELICT
CONTRACT DELICT
Mutual support Buyer’s To return a lost To go to jail Driver’s
of spouses to obligation to pay property (criminal obligation to pay
each other the price and the obligation) damages to
Seller’s To refund an persons he
Employer’s obligation to overpayment To return the injured through
obligation to pay deliver property he stole his reckless
minimum wage, To return driving
13th month pay, To pay the erroneous To pay damages
overtime pay, penalty in a payment to the victim of Manufacturer’s
and holiday pay penal clause his criminal act obligation to pay
Solutio Indebiti damages to
Buyer’s warranty Bus Company’s Illegal recruiter’s customers
against hidden obligation to pay Negotiorum obligation to injured by its
defects damages to Gestio return the defective
passengers placement fees products
To pay taxes and injured due to When property of their victims
business licenses reckless driving is saved in times
of its driver of calamity
 II. NATURE AND EFFECTS OF OBLIGATIONS

A. CONCOMITTANT OBLIGATIONS TO GIVE, TO DO, OR NOT TO DO

1. Obligation to give a SPECIFIC OBJECT
a. To take care
- Standard of care to be observed : Diligence of a Good Father of a Family
Non-observance b. To deliver on time
of the required i. On the date agreed upon
standard of care ii. If there is no agreement, at the time of the perfection of the contract
results in c. To deliver the fruits
NEGLIGENCE i. Fruits and Kinds of Fruits
(CULPA) ii. Time to deliver the fruits
- From the time the obligation to deliver arises
In case of SALE, d. To deliver the accessions and accessories
the fruits the be - Even though they may not have been mentioned
delivered are e. To be liable for damages in case of Fraud, Negligence, Legal delay, or
from the time of Contravention of the tenor of the obligation
PERFECTION
2. Obligation to give a GENERIC OBJECT
a. To deliver a thing of a quality intended by the parties taking into account the
purpose of the obligation and other circumstances
b. To bear the expenses of giving if he fails to give
c. To be liable for damages in case of Fraud, Negligence, Legal delay, or
Contravention of the tenor of the obligation

GENERIC OBJECT SPECIFIC OBJECT

 Refers to a group, class, kind, or  Refers to a particular member of a
specie of things (Broad) group, class, kind, or specie
SEGREGATED from the rest
(Definite)

 Cannot be lost nor destroyed  Can be lost or destroyed

 Replaceable  Not replaceable (Hence, results in the

extinguishment of the obligation if
lost or destroyed before the obligation
can be performed)

 There is no duty to take care and  There is a duty to take care and
preserve preserve

EXAMPLES EXAMPLES
A male Doberman dog My male Doberman named Killer
A book on Business Law 1 My ONLY book in Business Law 1
A house located in Makati A house with the address No. 123 Camutin
One (1) piece of Chicken Joy Street, Boni Avenue, Makati
The one (1) piece of Chicken Joy I bought
yesterday

3. Obligation to do
a. To do exactly what was agreed upon
b. To bear the expenses of doing the obligation if he fails to perform (Have the
obligation executed at his own cost)
c. To undo what was poorly done
d. To be liable for damages in case of Fraud, Negligence, Legal delay, or
Contravention of the tenor of the obligation
 4. Obligation not to do
a. To abstain from doing what is prohibited to be done Legal delay is
b. To be liable for damages in case of Fraud, Negligence, Legal delay, or NOT possible in
Contravention of the tenor of the obligation obligation not to
do.
B. SOURCES OF OBLIGATIONS TO PAY DAMAGES [ F N L C ]
1. Fraud (Dolo)
- Use of insidious words or machinations to induce another to enter into a
contract
- The following are NOT acts of fraud
a. Failure to disclose facts when there is NO duty to reveal them
b. Usual exaggerations in trade when the other party had an opportunity
to know the facts
c. Mere expression of an opinion by a Non-expert
- Kinds of Fraud
i. Dolo Causante (Causal Fraud) Fraud is not
- Vitiates consent; Serious fraud (VOIDABLE) actionable if BOTH
- REMEDY: Annulment plus Damages parties are EQUALLY
ii. Dolo Incidente (Incidental Fraud) guilty of fraud (IN
- Does not make the contract defective PARI DELICTO)
- REMEDY: Damages only
iii. Future Fraud
- Waiver of an action based on future fraud is VOID
iv. Past Fraud

2. Negligence (Culpa)
- Any voluntary act or omission, there being no malice, which prevents the
normal fulfillment of an obligation
- Failure to observe the standard care required by law
- Kinds of Negligence
i. Culpa Aquiliana ( Civil Negligence)
- Synonymous to quasi-delict or tors
ii. Culpa Contractual
iii. Culpa Criminal

3. Legal Delay (Mora)

- Kinds of Legal Delay
i. Mora Solvendi (Debtor’s Legal Delay)
a. Ex Re – in obligation to give
GENERAL RULE: No
b. Ex Persona – in obligation to do
demand, No Legal Delay
ii. Mora Accipiendi (Creditor’s Legal Delay)
iii. Compensatio Morae
- Legal delay in reciprocal obligation
- When demand becomes unnecessary for incur Legal Delay [ P L U T O ]
i. Performance of reciprocal obligation
ii. Law so provides
iii. Uselessness of demand
iv. Time is of the essence
v. Obligation so provides

4. Contravention of the Tenor of the Obligation

C. EFFECTS OF FORTUITOUS EVENTS ON THE OBLIGATION

1. Fortuitous Event, definition
- Unforeseen or may be foreseen but inevitable/unavoidable
- Excuse for non-performance of an obligation
2. Kinds of fortuitous events
a. Acts of God (Force Majeure)
 b. Acts of Man
3. Effects of fortuitous event on an obligation
4. Exceptions to non-liability of the debtor in case of non-performance of an
obligation due to fortuitous events [ L A N ]
a. Law so provides
i. If [ F N L C ] is present
ii. If the Obligor promises to deliver the same thing to two or more persons
who do not have the same interest
iii. If the object is GENERIC
iv. If the source of the obligation is delict or crime
b. Agreement or stipulation so provides
c. Nature of the Obligation requires assumption of risk (Typical in Insurance
Contracts)

III. KINDS OF OBLIGATIONS AND THEIR LEGALS EFFECTS

A. DEPENDENT UPON THE HAPPENING OF AN EVENT I will pay Php 1,000.00

1. Pure Obligation
- Immediately demandable I will support you until
- Obligations which are immediately demandable you are employed
i. Pure Obligation
ii. Obligation with a Resolutory Condition I will support you until
iii. Obligation with a Resolutory Period 2030.
iv. Obligation not to do an impossible condition
I will support you if you
2. Conditional Obligation stop taking drugs.
- A future, uncertain event, the existence or non-existence of which is made to
depend either the accomplishment, the modification, or rescission of an
obligation
- Kinds of condition and their effects on an obligation
i. Suspensive Condition
- Makes an obligation not immediately demandable but creates the
obligation once it happens.
ii. Resolutory Condition
- Makes an obligation immediately demandable but extinguishes the
obligation once it takes place
iii. Potestative Condition
- Depends upon the will of the parties
- Creditor’s will : VALID
- Debtor’s will : VOID
iv. Casual Condition
- Depends upon chance or the will of a third person
v. Mixed Condition
- Depends partly upon chance and partly upon the will of a third
person
vi. Impossible Condition
- Makes an obligation VOID
vii. Positive Condition
- Extinguishes the obligation as soon as :
 The time expires without the event taking place; or
 It has become indubitable that the event will not place
although the time specified has not expired
viii. Negative Condition
- Makes the obligation effective and binding once :
 The time has elapsed without the event taking place; or
 It becomes evident that the event cannot occur although the
time indicated has not yet elapsed
 3. Obligation with a Period
- A certain future event, the existence or non-existence of which is made to
depend either the accomplishment, the modification, or rescission of an
obligation
- When the court may fix the period of the obligation
a. If there is no period fixed but it could be inferred from the nature and
circumstances of the obligation that a period was intended;
b. If the duration of the period is made to depend upon the will of the
debtor (Potestative Period);
c. If debtor binds himself to pay once his means permit him to do so.
- Kinds of period
i. Suspensive and Resolutory
ii. Conventional/Voluntary, Legal, and Judicial
iii. Definite and Indefinite
-
B. AS TO COLLECTIBILITY
C. AS TO DISTRIBUTIVE CHARACTER
D. AS TO WHETHER CAPABLE OF PARTIAL PERFORMANCE
E. WHETHER WITH OR WITHOUT A PENAL CLAUSE
F. WHETHER RECIPROCAL IN CHARACTER OR NOT
G.

IV. EXTINGUISHMENT OF OBLIGATION